According to reports from The Economic Times, JP Morgan expects Brent crude to remain in the low-$100s for much of 2026, even if the Strait of Hormuz reopens in June. The bank's revised framework assumes that the pace of oil inventory depletion will ultimately force the Strait to reopen "one way or another," with the base case anchored on a June 1 reopening following a credible announcement confirmed by both sides. However, Saudi Aramco CEO Amin Nasser warned that if the reopening is delayed by just a few more weeks, normalization will last into 2027. Even if the vital waterway were to reopen today, Aramco warns it would "still take months for the market to rebalance."
As reported by The Economic Times, JP Morgan noted that prices were unlikely to normalize quickly, as OECD commercial inventories approach operational stress levels. The bank expects the bottleneck to likely shift from the Strait itself to tanker availability, refinery ramp-ups and wider logistical constraints, keeping the market tight well into the second half of 2026. JP Morgan told clients that crude oil inventories are on track to plunge below 2022 levels and approach operational stress levels by early June, acting as shock absorbers for the system. The seasonal lift in summer demand, combined with exceptionally large commercial stock draws seen in March and April, and likely again in May, should push OECD inventories toward operational stress levels by August.
According to JP Morgan's analysis reported by The Economic Times, the bank now expects Brent to average $96 per barrel in 2026, with quarterly averages of $103 in the second quarter, $104 in the third quarter and $98 in the fourth quarter. This projection reflects the bank's expectation that accelerating inventory draws and logistical bottlenecks will keep the oil market tight throughout the year. The bank cautioned that barrels of crude oil will likely stay in the low $100s for most of the rest of the year, even in the best-case scenario where the Strait reopens.
As reported by The Economic Times, looking into 2027, JP Morgan expects producers in the Gulf to maximize output after the Strait reopens in an effort to recoup lost revenues. High prices are also expected to encourage other producers to run at capacity, pushing the market into meaningful oversupply from September 2026. By early 2027, the bank expects OECD commercial inventories to normalize toward pre-war levels, putting sustained downward pressure on prices. The critical global shipping route bypasses both Iran and Oman and normally carries a significant share of the world's oil exports from Gulf producers, including Saudi Arabia and Kuwait.
